Major Taiwanese news network Liberty Times Network (LTN) recently reported that, according to an official document that the U.S. Commerce Department’s Bureau of Industry and Security (BIS) issued, the U.S. government has decided to apply export controls on goods sold to SMIC based on the U.S. Export Administration Regulations (EAR) Section 744.21. The restriction is based on the fact that SMIC products are ultimately used for military purposes. The U.S. Department of Commerce has informed U.S. export companies about this decision. The document listed SMIC and its branches as well as directly related companies inside and outside of China. SMIC is China’s largest chip maker and Huawei’s only hope for a domestic supply of chips. However, SMIC depends heavily on U.S. technology for manufacturing equipment and software. Also, SMIC technology is generations behind leading chip-making vendors like TSMC (Taiwan Semiconductor Manufacturing Company). This new U.S. sanction will place huge pressure on Huawei as well as the entire Chinese chip-making industry.
Source: LTN, September 26, 2020